The Firm as a Bundle of Competencies - MIT OpenCourseWare · PDF file ·...
Transcript of The Firm as a Bundle of Competencies - MIT OpenCourseWare · PDF file ·...
System Lock-In
Total Customer Solutions
Best Product
Proprietary StandardProprietary StandardMicrosoft, Intel
Low CostLow CostSouthwest Airlines,
Nucor
Dominant ExchangeDominant ExchangeeBay, Yellow Pages
Horizontal BreadthHorizontal BreadthFidelity
Exclusive ChannelExclusive Channelrural Wal-Mart
DifferentiationDifferentiationSony Wega
Redefining theRedefining theCustomer RelationshipCustomer Relationship
Saturn
CustomerCustomerIntegrationIntegration
EDS
The Triangle:The Triangle:Options for Strategic PositioningOptions for Strategic Positioning
Delta Model Strategies
Total Customer SolutionsTotal Customer Solutions
DifferentiatDifferentiat
Low costLow cost
Delta Model StrategiesDelta Model Strategies
DefinitionDefinition CommentsComments
The problem with this strategic position is that as soon as theThe problem with this strategic position is that as soon as thedifferentiated product emerges, competitors tend to imitate themdifferentiated product emerges, competitors tend to imitate them. An. Ancompetitive advantage is therefore noncompetitive advantage is therefore non--sustainable.sustainable.
While maintaining effective production economies focus on keyWhile maintaining effective production economies focus on keydifferentiation in the product features and functionalities suchdifferentiation in the product features and functionalities such that thethat theproducts are uniquely desired and command price premiumsproducts are uniquely desired and command price premiums
ionion
S ince there is only one lowest cost producer, this strategy leavSince there is only one lowest cost producer, this strategy leavesesvery litt le space as a competitive position. It also tends tovery little space as a competitive position. It also tends tostandardize the product offering, commoditize the customer, andstandardize the product offering, commoditize the customer, and intensify rivalry.intensify rivalry.
Focus on being the lowest cost provider in an undifferentiated pFocus on being the lowest cost provider in an undifferentiated productroductcategorycategory
Centered on product economiesCentered on product economiesBest ProductBest Product
Oriented to customer economicsOriented to customer economics
A focus is places on considering the full experience of the custA focus is places on considering the full experience of the customer from theomer from thepoint of acquisition through to the complete lifecycle of ownerspoint of acquisition through to the complete lifecycle of ownership of thehip of the
This positioning is based upon an intimate knowledge of heThis positioning is based upon an intimate knowledge of hecustomer base leading toward an effective customer segmentationcustomer base leading toward an effective customer segmentation and a differentiated treatment of the customer tiers.and a differentiated treatment of the customer tiers.productproduct
A complete set of product and service offerings that fulfill theA complete set of product and service offerings that fulfill the entire customerentire customerneed are customized and provided.need are customized and provided. ““OneOne--stop shopping for a uniquestop shopping for a unique
W e are seeking a dominant position inWe are seeking a dominant position in ““share of the wallet of theshare of the wallet of the customer.customer.””
solution.solution.””
This strategy seeks to effectively substitute for or leverages aThis strategy seeks to effectively substitute for or leverages activitivitiessct ie T he firm is regarded as a bundle of competencies that will beThe firm is regarded as a bundle of competencies that will becurrently performed by the customer. It is outsourcing in its ecurrently performed by the customer. It is outsourcing in its extr eme form an dxtreme form and brought to the customer to enhance the customer economics.brought to the customer to enhance the customer economics.at least represents a complex web of connections with the customat least represents a complex web of connections with the customer thater thatenhance their ability to do business and to use your product.enhance their ability to do business and to use your product.
FoFocusess oncuse on complementorcomplementor economicseconomics
ieSignificant barrSignificant barriers are in place that make it difficult for cors are in place that make it difficult for competitors to evenpetitors to evencompete f or the acquisition of customers.compete for the acquisition of customers.
This is a difficult position to achieve and to sustain. RegulatThis is a difficult position to achieve and to sustain. Regulatoryory practices tend to be deployed to prevent it.practices tend to be deployed to prevent it.
With this strategy the company provides anWith this strategy the company provides an interface between buyers andinterface between buyers and sellers that s very hard to displace once it achieves critical msellers that s very hard to displace once it achieves critical mass.
T his is the most accessible of all of the systems lockThis is the most accessible of all of the systems lock--in options.in options.The first mover advantage is critical.The first mover advantage is critical.ass.
This tion isThe customer is drawn to your product because of the extensive nThe customer is drawn to your product because of the extensive net work ofetwork ofthird partythird party complementorscomplementors that are designed to work with your product.that are designed to work with your product.
This opoption isn’’t available in most industries. If it can be achievedt available in most industries. If it can be achieved the rewards are enormous.the rewards are enormous.
PositionsPositions
Redefining the customerRedefining the customerexperienceexperience
Horizontal BreadthHorizontal Breadth
Customer IntegrationCustomer Integration
System LockSystem Lock--InIn
Restricted AccessRestricted Access
Dominant ExchangeDominant Exchange
Proprietary StandardProprietary Standard
Best ProductBest Product Centered on product economiesCentered on product economiesLow costLow cost Focus on being the lowest costFocus on being the lowest cost
provider in an undifferentiatedprovider in an undifferentiated product categoryproduct category
Since there is only one lowestSince there is only one lowest cost producer, this strategycost producer, this strategy leaves very little space as aleaves very little space as a competitive position. It alsocompetitive position. It also tends to standardize the producttends to standardize the product offering, commoditize theoffering, commoditize the customer, and intensify rivalry.customer, and intensify rivalry.
DifferentiationDifferentiation While maintaining effectiveWhile maintaining effective production economies focus on keyproduction economies focus on key differentiation in the productdifferentiation in the product features and functionalities suchfeatures and functionalities such that the products are unique desiredthat the products are unique desired and command price premiumsand command price premiums
The problem with this strategicThe problem with this strategic position is that as soon as theposition is that as soon as the differentiated product emerges,differentiated product emerges, competitors tend to imitatecompetitors tend to imitate them. An competitive advantagethem. An competitive advantage is therefore nonis therefore non--sustainable.sustainable.
Delta Model StrategiesDelta Model Strategies
PositionsPositions DefinitDefinitiionon CommentsComments
Delta Model Strategies Best ProductBest Product
Low costLow cost SSiince therence there iis ons onlly oney one llowest cost producer, thowest cost producer, thiis strategys strategy lleaveavesesveryvery lliittttlle space as a compete space as a competiittiive posve posiittiion.on. IIt at allso tends toso tends tostandardstandardiize the product oze the product offferferiing, commoditng, commoditiize the customer, andze the customer, and iintntens ify riivalry.ensify r valry.
Focus on beFocus on beiing theng the llowest cost providerowest cost provider iin an undn an undiifffferenterentiiated pated productroductcategorycategory
Centered on product economCentered on product economiieses
DDiifffferenterentiiatatiionon W hWhiille mae maiintantaiinniing eng efffectfectiive productve productiion economon economiies focus on key des focus on key diifffferenterentiiatatiionon iin the productn the product ffeatures and functeatures and functiionaonallititiies such that the produces such that the products are uniquets are uniquedesdesiired and command price premred and command price premiiumsums
The probThe probllem wem wiith this strategth this strategiic posc posiittiion is that as soon as theon is that as soon as theddiiffferentferentiiated product emerges, competitors tend toated product emerges, competitors tend to iimitate themmitate them. An. Ancompetcompetiittiive advantageve advantage iis therefore nons therefore non--sustasustaiinable.nable.
System LockSystem Lock--InIn FoFocusess oncuse on complementorcomplementor economicseconomics
This option isnThis option isn’’t available in most industries. If it can be achievedt available in most industries. If it can be achieved the rewards are enormous.the rewards are enormous.
The customer is drawn to your product because of the extensive nThe customer is drawn to your product because of the extensive network ofetwork ofthird partythird party complementorscomplementors that are designed to work with your product.that are designed to work with your product.
Proprietary StandardProprietary Standard
T his is the most accessible of all of the systems lockThis is the most accessible of all of the systems lock--in options. Thein options. Thefirst mover advantage is critical.first mover advantage is critical.
W ith this strategy the company provides anWith this strategy the company provides an interface between buyers andinterface between buyers and sellers that s very hard to displace once it achieves critical msellers that s very hard to displace once it achieves critical mass.ass.
Dominant ExchangeDominant Exchange
This is a difficult position to achieve and to sustain. RegulatThis is a difficult position to achieve and to sustain. Regulatoryory practices tend to be deployed to prevent it.practices tend to be deployed to prevent it.
Significant barriers are in place that make it difficult for comSignificant barriers are in place that make it difficult for competitors to evenpetitors to evencompete for the acquisition of customers.compete for the acquisition of customers.
Restricted AccessRestricted Access
T he firm is regarded as a bundle of competencies that will beThe firm is regarded as a bundle of competencies that will bebrought to the customer to enhance the customer economics.brought to the customer to enhance the customer economics.
This strategy seeks to effectively substitute for or leverages aThis strategy seeks to effectively substitute for or leverages activities currentlyctivities currently performed by the customer. It is outsourcing in its extreme forperformed by the customer. It is outsourcing in its extreme form and at leastm and at leastrepresents a complex web of connections with th e customer that erepresents a complex web of connections with the customer that enhance theirnhance theirability to do business and to use your product.ability to do business and to use your product.
Customer IntegrationCustomer Integration
W e are seeking a dominant position inWe are seeking a dominant position in ““share of the wallet of theshare of the wallet of the customer.customer.””
A complete set of product and service offerings that fulfill theA complete set of product and service offerings that fulfill the entire customerentire customerneeds are customized and provided.needs are customized and provided. ““OneOne--stop shopping for a uniquestop shopping for a unique solution.solution.””
Horizontal BreadthHorizontal Breadth
This positioning is based upon an intimate knowledge ofThis positioning is based upon an intimate knowledge of thethecustomer base leading toward an effective customer segmentationcustomer base leading toward an effective customer segmentation and a differentiated treatment of the customer tiers.and a differentiated treatment of the customer tiers.
A focus is places on considering the full experience of the custA focus is places on considering the full experience of the customer from theomer from thepoint of acquisition through to the complete lifecycle of ownerspoint of acquisition through to the complete lifecycle of ownership of thehip of the productproduct
Redefining the customerRedefining the customerexperienceexperience
Oriented to customer economicsOriented to customer economicsTotal Customer SolutionsTotal Customer Solutions
Total CustomerTotal Customer Oriented to customer economicsOriented to customer economicsSolutionsSolutions
Redefining theRedefining the customercustomer
experienceexperience
A focus is places on considering the fullA focus is places on considering the full experience of the customer from the pointexperience of the customer from the point of acquisition through to the completeof acquisition through to the complete lifecycle of ownership of the productlifecycle of ownership of the product
This positioning is based upon anThis positioning is based upon an intimate knowledge of the customerintimate knowledge of the customer base leading toward an effectivebase leading toward an effective customer segmentation and acustomer segmentation and a differentiated treatment of thedifferentiated treatment of the customer tiers.customer tiers.
Horizontal BreadthHorizontal Breadth A complete set of product and serviceA complete set of product and service offerings that fulfill the entire customerofferings that fulfill the entire customer needs are customized and provided.needs are customized and provided. ““OneOne--stop shopping for a uniquestop shopping for a unique solution.solution.””
We are seeking a dominant positionWe are seeking a dominant position inin ““share of the wallet of theshare of the wallet of the customer.customer.””
CustomerCustomer IntegrationIntegration
This strategy seeks to effectivelyThis strategy seeks to effectively substitute for or leverages activitiessubstitute for or leverages activities currently performed by the customer. It iscurrently performed by the customer. It is outsourcing in its extreme form and atoutsourcing in its extreme form and at least represents a complex web ofleast represents a complex web of connections with the customer thatconnections with the customer that
The firm is regarded as a bundle ofThe firm is regarded as a bundle of competencies that will be brought tocompetencies that will be brought to the customer to enhance thethe customer to enhance the customer economics.customer economics.
enhance their ability to do business andenhance their ability to do business and to use your product.to use your product.
Delta Model StrategiesDelta Model Strategies
PositionsPositions DefinitionDefinition CommentsComments
Best ProductBest Product Centered on product economiesCentered on product economiesDelta Model Strategies Low costLow cost Focus on being the lowest cost provider in an undifferentiated pFocus on being the lowest cost provider in an undifferentiated product categoryroduct category SincSince therhere is only ons only one lowest cost producer, this strategy leaowest cost producer, this strategy leaves veryes verye t e i e l
little space as a competitive position. It also tends to standalittle space as a competitive position. It also tends to standardize therdize theproduct offering, commoditize the customer, and intensify rivalrproduct offering, commoditize the customer, and intensify rivalry.y.
DifferentiationDifferentiation W hile maintaining effective production economies focus on key diWhile maintaining effective production economies focus on key differentiation infferentiation inthe product features and functionalities such that the productsthe product features and functionalities such that the products are uniqueare unique
The problem with this strategic position is that as soon as theThe problem with this strategic position is that as soon as thedifferentiated product emerges, competitors tend to imitate themdifferentiated product emerges, competitors tend to imitate them. An. Ancompetitive advantage is therefore noncompetitive advantage is therefore non--sustainable.sustainable.desired and command price premiumsdesired and command price premiums
Total Customer SolutionsTotal Customer Solutions Oriented to customer economicsOriented to customer economics
Redefining the customerRedefining the customerexperienceexperience
A focus is places on considering the full experience of the custA focus is places on considering the full experience of the customer from theomer from thepoint of acquisition through to the complete lifecycle of ownerspoint of acquisition through to the complete lifecycle of ownership of the producthip of the product
This positioning is based upon an intimate knowledge of he custoThis positioning is based upon an intimate knowledge of he customermerbase leading toward an effective customer segmentation and abase leading toward an effective customer segmentation and adifferentiated treatment of the customer tiers.differentiated treatment of the customer tiers.
Horizontal BreadthHorizontal Breadth A complete set of product and service offerings that fulfill theA complete set of product and service offerings that fulfill the entire customerentire customerneed are customized and provid ed.need are customized and provided. ““OneOne--stop shopping for a unique solution.stop shopping for a unique solution.””
W e are seeking a dominant position inWe are seeking a dominant position in ““share of the wallet of theshare of the wallet of the customer.customer.””
ly e f a b e ofCustomer IntegrationCustomer Integration This strategy seeks to effectively substitute for or leverages aThis strategy seeks to effectively substitute for or leverages activities currentctivities currentlyperformed by the customer. It is outsourcing in its extreme forperformed by the customer. It is outsourcing in its extreme form and at leastm and at least
ThThe firm is regarded asirm is regarded as a bundlundle of competencies that will be bcompetencies that will be broughtoughtto the customer to enhance the customer economics.to the customer to enhance the customer economics.
represents a complex web of connections with th e customer that erepresents a complex web of connections with the customer that enhance theirnhance theirability to do business and to use your product.ability to do business and to use your product.
Focuses onFocuses on complementorcomplementor economicseconomics
This option isnThis option isn’’t available in most industries. If it can be achieved thet available in most industries. If it can be achieved the rewards are enormous.rewards are enormous.
The customer is drawn to your product because of the extensive nThe customer is drawn to your product because of the extensive network of thirdetwork of thirdpartyparty complementorscomplementors that are designed to work with your product.that are designed to work with your product.
Proprietary StandardProprietary Standard
This is the most acc ess ible of all of the systems lockThis is the most accessible of all of the systems lock-in options. Thein options. Thefirst mover advantage is critical.first mover advantage is critical.
W ith this strategy the company provides anWith this strategy the company provides an interface between buyers and sellersinterface between buyers and sellersthat is very hard to displace once it achieves critical mass.that is very hard to displace once it achieves critical mass.
Dominant ExchangeDominant Exchange
This is a difficult position to achieve and to sustain. RegulatThis is a difficult position to achieve and to sustain. Regulatoryory practices tend to be deployed to prevent it.practices tend to be deployed to prevent it.
Significant barriers are in place that make it difficult for comSignificant barriers are in place that make it difficult for competitors to evenpetitors to evencompete for the acquisition of customers.compete for the acquisition of customers.
Restricted AccessRestricted Access
System LockSystem Lock--InIn
System LockSystem Lock--InIn Focuses onFocuses on complementorcomplementor economicseconomicsRestrictedRestricted
AccessAccessSignificant barriers are in place thatSignificant barriers are in place that make it difficult for competitors tomake it difficult for competitors to even compete for the acquisition ofeven compete for the acquisition of customers.customers.
This is a difficult position toThis is a difficult position to achieve and to sustain.achieve and to sustain. Regulatory practices tend to beRegulatory practices tend to be deployed to prevent it.deployed to prevent it.
DominantDominant ExchangeExchange
With this strategy the companyWith this strategy the company provides anprovides an interface betweeninterface between buyers and sellers that is very hardbuyers and sellers that is very hard to displace once it achieves criticalto displace once it achieves critical
This is the most accessible of allThis is the most accessible of all of the systems lockof the systems lock--in options.in options. The first mover advantage isThe first mover advantage is critical.critical.
mass.mass.ProprietaryProprietary
StandardStandardThe customer is drawn to yourThe customer is drawn to yourproduct because of the extensiveproduct because of the extensive network of third partynetwork of third partycomplementorscomplementors that are designed tothat are designed to work with your product.work with your product.
This option isnThis option isn’’t available int available in most industries. If it can bemost industries. If it can be achieved the rewards areachieved the rewards are enormous.enormous.
ENGAGEMENT TEAM
McKinsey Organizational Structure
ENGAGEMENTENGAGEMENT TEAMTEAM
Business Technology OfficeBusiness Technology OfficeCorporate FinanceCorporate FinanceMarketing & OperationsMarketing & OperationsOrganizationOrganizationStrategyStrategy
FUNCTIONAL CAPABILITYFUNCTIONAL CAPABILITY GROUPSGROUPS
AmsterdamAmsterdamAntwerpAntwerpAthensAthensAtlantaAtlantaAucklandAucklandBangkokBangkokBarcelonaBarcelonaBeijingBeijingBerlinBerlinBogotBogotááBostonBostonBrusselsBrusselsBudapestBudapest
GLOBAL OFFICESGLOBAL OFFICESDetroitDetroitDublinDublinDuDuDDüüsseldorfsseldorfFrankfurtFrankfurtGenevaGenevaGothenburgGothenburgHamburgHamburgHelsinkiHelsinkiHong KongHong KongHoustonHoustonIstanbulIstanbul
Automotive & AssemblyAutomotive & AssemblyBanking & SecuritiesBanking & SecuritiesChemicalsChemicalsConsumer Packaged GoodsConsumer Packaged GoodsElectric Power & Natural GasElectric Power & Natural GasHigh TechHigh TechInsuranceInsurance Media & EntertainmentMedia & EntertainmentMetals & MiningMetals & MiningNonprofitNonprofitPayer/ProviderPayer/ProviderPetroleumPetroleumPharmaceuticals & Medical ProductsPharmaceuticals & Medical Products Private EquityPrivate EquityPulp & Paper/Forest ProductsPulp & Paper/Forest ProductsRetailRetailTelecommunicationsTelecommunicationsTravel & LogisticsTravel & Logistics
CLIENTELE INDUSTRYCLIENTELE INDUSTRY SECTORSSECTORS
CUSTOMERCUSTOMER
PracticePractice LeaderLeader
Team LeaderTeam Leader
Office ManagerOffice Manager Client ImpactClient Impact TeamTeam
IndustryIndustryExpertExpert
The Delta Model: Description of McKinsey’s Competence
Total Customer Solutions
Differentiation
ip
Market Share
Customer interests come first Client Impact & Service
) ional
conducts
Clientel
Decentralized
Best Product
System Lock-In
High-Caliber People Collaborative Process Brand & Reputation High-Level Customer
RelationshKnowledge & Expertise Management Team Global Presence Privately-owned
Dynamic Culture Quality
Customer Integration
Target individual market
Team (CST
Redefining Customer Relationship
Long-term vision Highest standards of profess
Customer as a business partner Customized/personalized services
Horizontal Breadth
e industry sectors Functional groups Strong global presence Integrated consulting
services (one-stop shop)
Exclusive Channel
(local) presence Alumni Network
Dominant Exchange
Create few industry standards for private and public sectors
Proprietary Channel
Failed to lock-out competitors and lock-in complementors
1920s-1960s
1970s-2000s
The Delta Model: Description of Biogen’s Full Array of Strategic Positions
The Delta Model: Biogen moving towards TCS
disease states
(alliances)
Horizontal Breadth
Exclusive Channel
in lawsuit
needs
Proprietary Standard
web page
SLI
TCS BP Differentiation • Indications for specific
• Specific Interferon science
• Autoimmune • Complementor development • R&D & pipeline - for patients & firms
• Medicare approval for Avonex • Advantage with regulators and speed to market due to clinical trial rep, Co-defendant
• Clinical trial sites best in business - attract complementors and recruitment • Suppliers on-site reps (strong bonding!) , scale economy, Extended to travel, and IT
• Patient protected products
Customer Integration • Bonding through dynamic investment in personalized
Redefining customer experience • Information Exchange point • Participation in patient advocacy • Medical Resource for patients • Informational resource for physicians
Rahul K. Kdanda, “From Biogen to Idec: Strategy evolution from commoditized customers to the Delta Model”, 15.902 Student Report
Schwab - Expanding the Strategic Options
Dominant ExchangeDominant Exchange Proprietary ChannelProprietary ChannelInvestors can easily access many interfaces forInvestors can easily access many interfaces for The trading and investing standards are notThe trading and investing standards are notadvice and trading. But if Schwab was able toadvice and trading. But if Schwab was able to proprietary to Schwabproprietary to Schwabdevelop a comprehensive and integrated network, itdevelop a comprehensive and integrated network, itmay be able to function as a dominant exchangemay be able to function as a dominant exchange
Restricted AccessRestricted Access SystemSystem Schwab may be able to achieveSchwab may be able to achieve A deep relationship and comprehensive integrationA deep relationship and comprehensive integration –– LockLock--InIn firstfirst--mover advantage with anmover advantage with an or entanglementor entanglement –– of the customerof the customer’’s financial lifes financial life expanded business scopeexpanded business scopewould discourage switchingwould discourage switching
Low costLow costSchwabSchwab’’s prices are low, but they are not the lowests prices are low, but they are not the lowestCustomer IntegrationCustomer Integration cost producer. However, price is not the primarycost producer. However, price is not the primary
Schwab has the opportunity to leverage itsSchwab has the opportunity to leverage its concern forconcern for ValidatorsValidators andand DelegatorsDelegators, and they should, and they shouldtechnology to gather and use customer information totechnology to gather and use customer information to subsub--segment the Selfsegment the Self--Directed segment and focus onDirected segment and focus on build customized services and deep relationshipsbuild customized services and deep relationships those who are more interested in servicethose who are more interested in service
TotalTotal Best ProductBest ProductHorizontal BreadthHorizontal Breadth CustomerCustomer DifferentiationDifferentiation
Schwab haSchwab has a robust product offering for this group,s a robust product offering for this group, SolutionsSolutions No firm has figured out how to profitably service theNo firm has figured out how to profitably service the is adding banking services, and can offer a broaderis adding banking services, and can offer a broader middle market, therefore the market usually hasmiddle market, therefore the market usually has product line than the discount brokers because of itsproduct line than the discount brokers because of its access to a limited range of services and minimalaccess to a limited range of services and minimal
handhand--holding and adviceholding and adviceaffiliation with U.S. Trust. Enhancing its capabilitiesaffiliation with U.S. Trust. Enhancing its capabilities Redefining Customer ExperienceRedefining Customer Experience Schwab, with its history of innovation, strongSchwab, with its history of innovation, strongwith technology will further differentiate Schwab.with technology will further differentiate Schwab.The middle market investor, especially theThe middle market investor, especially the technology capability and culture of leveling thetechnology capability and culture of leveling the ValidatorValidator, usually cannot access the quality or, usually cannot access the quality or playing field for the smaller investor, could be theplaying field for the smaller investor, could be the level of advice she is seekinglevel of advice she is seeking –– Schwab couldSchwab could firstfirst –– maybe onlymaybe only –– firm to develop this capabilityfirm to develop this capabilitydevelop a truly differentiating capability thatdevelop a truly differentiating capability that would redefine the customer experiencewould redefine the customer experience
Source:Source:Lynn MacDonald,Lynn MacDonald, ““Charles Schwab: Changing the Rules of the GameCharles Schwab: Changing the Rules of the Game””, 15.902 Student Report, 15.902 Student Report
Synthes
therapeutic areas
Low Cost
excellence
Horizontal Breadth • Coverage of all
Proprietary Standards • AO Foundation
Dominant Exchange • Role of IT in hospitals
• Manufacturing
Customer Engagement and Differentiation Customer Integration • Continuous New • Role of Consultants Product Development
• Education • Intimacy
Low cost
Capital One’s Competencies
Increasing barriers to entry from competitors
Lowest charge-off of industry
Restricted access
and exit from customers.
Horizontal breadth The widest coverage of the industry “Shut-off the credit filters”
Customer engagement • Actuarial calculation of customer’s lifetime NPV in real time • Testing for customer acquisition, card utilization and attrition • Horizontal accounting (entry and listing of cohort) • Detecting “adverse selection”
Customer integration Differentiation The Power of IBS 95% product
• Stream of new products2 years
• Short half-life cycle • Customized offers
The organizational capabilities • Entrepreneurial structure and culture • Information Technology know-how (largest Oracle data base - 40 pages per every American) • Customer service (30 million inquiries per year). Identify the caller after 1 ring with 70% accuracy. The right call routed to the right associate. • Recruiting talent (behavioral interviews, case interviews, standardized test)
Insights from the Delta ModelInsights from the Delta Model
1. Think of your firm as a bundle of competencies - Not merely as an engine for developing, making and distributing products.
2. Understand deeply your customer needs - Segment the customer base to differentiate meaningful value propositions to each customer tier.
3. The key to exploit opportunities for growth and profitability is to match your competencies with your customer needs. Try to be creative, bold and fast.